Bed Bath & Beyond’s supply chain issues hammered results. Its stock is up anyway

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A person enters a Bed Bath & Beyond store on October 01, 2021 in the Tribeca neighborhood in New York City.
Michael M. Santiago | Getty Images

Bed Bath & Beyond delivered disappointing fiscal third-quarter results on Thursday, with earnings and sales missing analysts’ expectations, prompting the home goods retailer to slash its outlook for the full year.

Shares initially dove more than 9% in premarket trading on the news, but recently climbed more than 11%.

Bed Bath & Beyond has been drawn into meme-stock rallies in the past. Last year, retail investors poured into names including GameStop and AMC Entertainment, sending these stocks on turbulent rides throughout the year. As the retail investors scooped up these stocks, short sellers were forced to dive in to cover their losses, driving the stock price even higher. This was likely a factor in Thursday’s stock move, as shares rose despite discouraging guidance.

Short sellers, which can include hedge funds, borrow a company’s shares in the hopes of buying it back at a lower price later, and pocketing the difference.

Bed Bath & Beyond’s stock was trading in heavy volume. Before the market opened, more than 4.3 million shares have changed hands. Over the past 10-days, the average daily volume for Bed Bath shares is 5.5 million.

The company faces big challenges ahead as it works to turn around its business. Chief Executive Mark Tritton has laid out a plan to revamp stores, add private label products and close underperforming locations. But in the latest quarter, the retailer’s progress was held back by a lack of inventory due to supply chain bottlenecks that cost Bed Bath & Beyond about $100 million, Tritton said. Issues escalated during December, he said, despite strong consumer demand in its stores and online.

Here’s how the retailer did in the three-month period ended Nov. 27 compared with what analysts were anticipating, using Refinitiv data:

Loss per share: 25 cents vs. breakeven results expected
Revenue: $1.88 billion vs. $1.95 billion expected

The company’s net loss grew to $276 million, or $2.78 per share, from a loss of $75 million, or 61 cents a share, a year earlier. Excluding one-time items, it lost 25 cents a share. Analysts surveyed by Refinitv had expected it to breakeven.

Sales fell 28% to $1.88 billion from $2.62 billion a year earlier. That missed estimates for $1.95 billion.

Systemwide same-store sales, a metric that tracks revenue at stores open for at least 12 months, dropped 7%. Analysts surveyed by StreetAccount were forecasting a 0.9% drop.

Bed Bath & Beyond expects to book an adjusted loss of anywhere between 15 cents per share to breakeven for the full year, on sales of $7.9 billion. It forecasts overall same-store sales growth at a high-single-digit rate. Previously, it forecast earnings between 70 cents and $1.10 per share, on an adjusted basis, on sales of $8.1 billion to $8.3 billion.

Analysts surveyed by Refinitiv had estimated full-year adjusted earnings of 78 cents per share on revenue of $8.1 billion.

For the fourth quarter, Bed Bath & Beyond expects earnings to breakeven or be as much as 15 cents per share, on an adjusted basis. It sees sales amounting to $2.1 billion. Same-store sales are expected to drop a high-single digit year over year.

Analysts expected earnings of 71 cents a share, on an adjusted basis, on sales of $2.3 billion.

Bed Bath & Beyond shares closed Wednesday down 10.8%. The stock has fallen about 32% from a year ago.

Find the full earnings press release from Bed Bath & Beyond here.

This story is developing. Please check back for updates.

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